Entrepreneurship: Art or Science?

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CORONAVIRUS IMPACT

Entrepreneurship needs more science

Starting your own business is an entrepreneurship survival trait

Ideally, entrepreneurship should be a balanced activity, combining talent and analytical thinking. In reality however, entrepreneurship is irrational activity.

Founding a company involves large amounts of risk, very low chances of success and zero work-life balance altogether.

Nevertless, the value of risk-taking is limitless on the both sides. Why? Illogical ideas are how society achieves progress.

Every great entrepreneur, from Richard Branson to the late Steve Jobs, made decisions that seemed crazy to the rest of us. Nevertheless, those decisions did eventually change the world.

Starting your own business is a survival trait, driven often by instincts. Entrepreneurs are flexed to think differently and to see things most people don’t. They should be encouraged to act on their instincts. In fact, a good chunk of what people call instinct is really a mix of experience and a data-driven way of thinking about things.

Entrepreneurial brains are like full-time pattern recognizers. People attribute radical decisions to their instincts, but there is actually a lot of hard thinking and information processing that goes on subconsciously. Of course, that doesn’t mean entrepreneurs always get it right. At least 90 percent of entrepreneurial ventures to fall prey to “noise and hallucination,” but the impact of the remaining 10 percent is so valuable that it warrants setting up an environment in which entrepreneurship can thrive.

Trusting your instincts sounds reasonable, but as entrepreneurs are indeed irrational, their instincts can lead them off target. This is why they need more entrepreneurship science. From a numbers’ perspective, it is only logical that if enough people are out there utilizing resources and energy into entrepreneurial activities, good things will happen.

Imagine an investment portfolio. There are methods of managing risk and increasing efficiency. However, the integral principle remains that you need to diversify for the overall portfolio to win.

If the fundamental goal is for entrepreneurs to drive progress in society, then it’s important to tweak and test the system to get better results, faster. The prevailing view among behavioral analysts is that if people understood their mental limitations as well as their physical ones, they could design products and companies more efficiently. Indeed, if people are irrational, then instinct can certainly lead them astray.

There isn’t enough emphasis on science and analytics at startups. Once entrepreneurs are aware of their own or their customers’ irrational behavior, they can make smarter decisions in every aspect of business operations.

For example, you might think customers will appreciate more choices. However, many studies have revealed that when there is too much variety, people become paralyzed by the options, and often walk away without making a purchase.

Knowledge can have important implications on marketing and product development. A more scientific approach can even help answer bigger instict questions, such as when to call it off if things are not going well. Entrepreneurs often feel a sense of pride and attachment to their ventures, and usually end up wasting money on an obviously sinking ship. But looking through a more rational lens, it becomes apparent far more quickly when to start over, or “pivot,” as they say in entrepreneurship and startup circles.

Applying more analytics to entrepreneurship isn’t expensive. Entrepreneurs have limited resources and attention spans, and there’s not a lot of time to learn the science surrounding every decision. Still, it doesn’t change the fact that entrepreneurs could benefit from being a bit more cautious. After all, instinct may be a survival trait, but so is prudence, and the latter doesn’t have a 90 percent failure rate.

The Dubai Chronicle’s editor advice is: When it comes to starting a business, take a more methodical approach.

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